James Galbraith was the unstoppable force behind the Crisis in the Eurozone Conference that took place at the Lyndon B. Johnson Graduate School fo Government, University of Texas, on 3rd and 4th November. (Click here for the program.) My great regret is that such a magnificent conference could never be held in… Europe. For Europe is ‘closed’ to free thinking. An arteriosclerosis that is a side effect of the same causes that have given rise to the systemic euro crisis. But enough said on the matter. What I want to do with this post is to offer readers access to the video links that allow one to watch the whole two day event, as if one were there – so to speak. Enjoy.

Thursday, November 3, 2011

Opening Session: Maciej Pisarski, Deputy Chief of Mission, Embassy of Poland; James Galbraith, Professor and Lloyd M. Bentsen Chair in Government and Business Relations, LBJ School of Public Affairs, The University of Texas at Austin

Bruno Amoroso, President of the Federico Caffè Study Centre, Roskilde University, and Professor at the International University of Hanoi, Vietnam; Terri Givens, Associate Professor, Department of Government, College of Liberal Arts, The University of Texas at Austin; Alain Parguez, Emeritus Professor of Economics, University of Franche-Comte, BesanconFrance; Matias Vernengo, Associate Professor, Economics, Department of Social and Behavioral Science, University of Utah

Dr. Heiner Flassbeck, Director of the Division on Globalization and Development Strategies of the United Nations Coonference on Trade and Development (UNCTAD); Robert Guttmann, Professor, Department of Economics, Hofstra University and Visiting Professor at the Université Paris XIII-France; Jan Toporowski, Professor of Economics and Finance, Chair of the Economics Department at the School of Oriental and African Studies, University of London; Gilles Raveaud, Assistant Professor of Economics at the Institute for European Studies, University of Paris

Friday, November 4, 2011

Stephen S. Cohen, Professor of Regional Planning, University of California at Berkeley, and Co-Director of the Berkeley Roundtable on the International Economy (BRIE); Norman Birnbaum, Professor Emeritus, Georgetown University Law Center; Richard Parker, Lecturer in Public Policy and Senior Fellow Shorenstein Center, John F. Kennedy School of Government, Harvard University; Aurore Lalucq, Economist, Executive Staff at Institut Veblen for Economic Reforms

31 Comments

Thank you for putting this up there. I watched the entire thing as I was grading papers. I thought you replied to some of the more contestatory comments with generosity while also restating your position quite well. I also took an interest in Richard Parker’s comments about narratives but never wrote any of it down and I feared the panels would be lost. This helps me a great deal as I was going to write Parker for his comments.

Yanis, an execellent presentation as always. Thank you for providing a clear representation of the EU challenges and a modest but effective first step in arresting the current impasse. You are most correct in acknowledging that fundamentally this is a political crisis that has transcended to an economic domain impacting not only Europe but the entire world. Ultimately, Germany needs to decide whether they wish to continue with the European experiment to the next phase of its evolution – an evolution that addresses the many kinks that were enivitable including the obvious inequalities among the EU states. Your concept of a “surplus recycling mechanism” and its challenges is a wonderful illustration of how the current economic environment is operating without surplus investment in less prominant geographies of southern europe. What is needed is equalization of investment to take place in have not states allowing for continued growth and consumption. Without such equalization, the German experiment fails and relinquishes the EU market to foriegn competition. Given Germanic hegemony in EU – would it not be in the interests of the German state to allow for a controlled growth and investment within the EU instead of dismantling the EU due to their unwillingness to pay for the ongoing development of Europe while remaining the dominant economic power? I am not espousing to German dominance I am merely wondering why Germany wouldnt wish to secure this market if for anything but in the interests of economic dominance?

I watched video 3. Thanks for posting those. I think it is the first time I see you in a kind of a “light debate” with other peers, on the modest proposal. This is a setting I understand and if my opinion is worth anything, I believe settings like that help more your modest proposal both in terms of refining it and persuading more “important” audiences about it.
Now having said that, I think your insistence that ECB issued bonds, -without at the same time any other structural changes within the eurozone- will convince the markets of their better value than the current individual sovereign debt bonds on a perceived combined weighted average basis, lacks evidence to support it. The current evidence actually is against it. Why?
You claim that ECBs enforcing power over eurozone member states together with giving super seniority to its own issued bonds would on one hand be a convincing factor and if that were not enough you say that its ability to print money alone should top it off.
Current evidence suggests that the first part of the above argument, has been proven over and over again not pragmatic.
The ECB has enforcing power over eurozone member states today. This has not prevented states from overrunning their Maastricht compliance debt to GDP ratios, it has not prevented states from using complicated derivative products to hide their budget deficits and cooking numbers and it has not prevented the ECB itself from laxing its criteria and accepting junk government bonds (e.g the Greek ones) as collateral to provide liquidity to Greek banks. So without any political enforcement (perhaps through new institutions) this will not change a bit even if tomorrow the ECB issues bonds on behalf of member states supposedly to cover up to their Maastricht compliance debt limit of 60% of GDP. Member states could still break the rules and the ECB will be exactly in the same situation as it is today trying to keep potentially insolvent states afloat by simply not enforcing the rules. I think the markets are “smart” enough to realize that. Perhaps a new ECB eurobond could provide a short lived excitement but at this point in the game I am not even sure that the market has the patience for yet another trick. Could have worked better maybe a year ago.

The second part of your argument, which is its unlimited firepower ability to print money, is actually stronger between the two. This is something it can do of course today if it were given the go ahead from the politicians and there is no need for it to issue new bonds or any other extra new mechanisms. I actually think that this might be even more effective and could have direct results. Let the ECB trade in the markets and “burn” a few key players, some hedgefunds perhaps, and this will be a more convincing deterrent against sovereign debt speculators than any other political solution European bureaucrats could dream of.

Apart from the economical part of this crisis , there is an ongoing activity on behalf of major global powers towards a better positioning to defend their interest in south and east mediterranean sea .
Identify the countries , with which Greece must reach an agreement and have it’s economic exploitation zones established and you will find yourselves stunned . Syria is going to be the next target . That’s where Russian armada is heading for .Greece , Egypt , Libya , Israel , Libanon , Syria are all countries involved in exploiting future gigantic oil and gas reserves . So much for the Arab spring .

There is also an international plan (US and Israel) to manufacture a huge undersea pipeline crossing Greece and ending up in Italy , from where Europe itself will be supplied with energy for the next decades .
Russia of course has different plans and wants a part of the share as well .
Noble vs Gazprom .

All the countries involved in this plan , are in big turmoil at this moment . Obama loves us…

Europe architecture had a weak point . The time of attack though is no accident to my understanding. US are going to have it their way , in the southern part of Europe , Russia will try to take its share and Europe is unable to have a say .

Europe’s big problem is not its finances . It is its inability to understand its power as a whole .
If member-states of Europe had comprehended their common interest , further integration would have resulted effortlessly .

Member states of Europe were too busy , defending their own interests against each other .

Independently of when the financial crisis would be over . Europe is doomed as a whole . As Mr Zouraris says in 4:20 min in the videos i have posted . “Having equal vote (in council of Europe) but no common interest , το εφ’εαυτόν έκαστος σπεύδει” .

Unless Europe finds it founding grounds , it would become either a totalitarian regime or separate .

I think here are many Greek people who knows Antonis Samaras better than me. As we all know he doesn’t want to sign any reform pledge. The Dutch finance minister said today:
‘We are well past that stage with Greece. We want to see a signature from Mr Samaras… otherwise, as far as I am concerned they will get no money. Absolutely not.’
Juncker said somthing similar.
I don’t think the other European countrys are gambling. But what about Samaras?

I have got shares – so maybe I should sell them before Tuesday.
A short answer from the Greece guys would be kind.

Dear Yannis,
Just to add another a piece in the puzzle of breaking europe into the North and South Alliance, the German way: Today we learned about the upcoming fall of the Thomas Cook agency… But how does this fit in the puzzle?
Well, If the North and South Alliances of europe are formed with the first one being comprised of the Northern countries of Europe (Scandinavia+Germany) and the other being comprised of Greece, Spain, Portugal, Italy (Mediterannean countries) then the only thing that the latter can offer to the North Alliance is Tourism services. This the only viable sector of the economies of the Southern alliance countries that can give them a chance for stregthening their overall economic status. However, with the fall of Thomas Cook there is actually one major player in the market for booking touristic services, and that is the german TUI. What does this mean? That the single playet (TUI) will have the absolute bargaining power in making very low-priced contracts with the hotels of the southern countries, which will already have been severely hit by the fall of Thomas Cook (leaving millions of unpaid debt). I guess you can see now that even this part of the economy of Southern countries will be in total control of a player located at the heart of the Northern alliance (how convenient!) whatever this may mean…
You can charge me for spreading conspiracy theories :-)…but you can also wait and see…
Best Regards

Yanis, you should call for a meeting/debate, in Sparta, of all the Greek PHD’s in Economics and Political Science, around the world. Hold it in a large auditorium.

The question should be “do we accept the EU conditions or do we exit the Euro. Give Green and Orange t-shirts to opposing positions and have them sit in opposite sections to let the people see where “the philosopher-kings” stand on this issue.

My assumption is that the vast majority will support the Euro and will relieve the anxiety of the people from making a very difficult decision. The motto — “the less catastrophic path”

The day after the meeting of PHD’s organize a new political party (in Sparta … for obvious reasons) whose goal is to change Greek political culture, create growth and restore the social safety net … especially pensions.

Criteria for membership:

1. Must be from the diaspora (to minimize conflict of interest)
2. Must have a net worth of over 1 million Euros (willing to invest in Greece in a “blind trust”.)
3. Must be willing to work for 1 Euro per year with no “extras
4. Do it quickly … before this Christmas.

At the local level:

Potential politicians (also from the diaspora) need not have a large net worth, but must have an income (pension?) which would mean they also could serve for 1 Euro per year.

Note: Make sure Jennifer Aniston, John Stamos and other celebrities are there to lend publicity and solidarity.

Thanks, Yanni. I watched all the videos where you were a participant. I shall watch the rest today. It’s sad that such a conference couldn’t happen in Europe. The irony is that most of the participants of the videos I saw (admittedly only only a subset so far) seemed to be European.

1.The Germans will betray Greece on the Macedonian Question because German banks are going to go bankrupt and may be owned by German pension funds. German pensions will be reduced because of the Greeks. Greece cannot afford this defeat at this time … for obvious reasons.

2. Write an article on how much money German pension funds are expected to lose. Publish it and then schedule meeting with Metropolis of Aetolia and Acarnania : Kosmas Papachristou. Ignore the politicians, historians and journalists. The priests must lead this compromise or it will not work.

3. Convince him to attend meet with Father Tsarknias, the ethnic Macedonian priest in Aridea, (yeah1 … your read it right the first time) as the first step of reconciliation. (Nixon goes to China)

Basis for a compromise:

1. Republic of Northern Macedonia … Province of Southern Macedonia.
2. Red Star of Vergina … Blue Star of Vergina
3. Macedonian language taught as an option in Greek schools in Florina and Edessa.
4. Bilingual city signs in Florina and Edessa and Macedonian language radio and television show funded by the ethnic Macedonian community.
5. Who are the Macedonians?
(Get Rossos and a Greek Historian to write a short … politically correct history … from both sides )

1945 – now

In Greece … Macedonian Slavs
In the Republic of Macedonia … Macedonians
In the diaspora … ethnic Macedonians

Macedonia is irrelevant. But the latest BIS shows that Germany doesn’t hold much of Greek debt, and neither does France. Both owe about $10 billion. That’s why they are bravely threatening to kick Greece out. Before, it was different.

It would be useful if all europeans were to remember the words Cicero wrote to his brother Quintus, on his becoming governor of Asia Minor, a Roman province heavily peopled by Greeks. He reminds Quintus just who he is in charge of and the debt owed to them:
(Source Cicero, Ad Quintum, 1.1)

“We are governing a civilised race, in fact the race from which civilisation is believed to have passed to others and assuredly we ought to give civilisation’s benefits above all to those from whom we have received it. Yes I say it without shame , especially as my life and record leave no opening for any suspicion of indolence or frivolity: everything that I have attained I owe to those pursuits and disciplines which have been handed down to us in the literature and teachings of Greece. Therefore, we may well be thought to owe a special duty to the people, over and above our common obligation to mankind; schooled by their precepts, we must wish to exhibit what we have learned before the eyes of our instructors.”

The Varoufakis phenomena!! Varoufakis is relatively young, cool, charismatic and successfully weaves hard economics with broader culture. Therefore, he is an attractive speaker. He also has a book to promote. Finally, he is also probably looking for some temporary teaching position, visiting professorship, outside of Athens. Who would want to be stuck in Athens over the next 10 years! Of course, all this does not make his argument less effective, but there is a “political economy” at work in his very high profile lately. He is appearing everywhere!!

Varoufakis’s origin’s in Marxist thought is quite obvious. Although, his narrative on the global economy has an element of truth with the subtext being that American economic strength was driven or facilitated by political imperatives. Naïve economists think politics have no bearing on economics but unfortunately this is about 80% of the profession and concentrated in places where it suits them to deny the role of politics in economics such as the United States and to a lesser extent, the United Kingdom. But as a good little Marxist, Varoufakis lays an overwhelming part of the blame with the United States. However, he fails to adequately address the impact of China and the emerging world on deficits, the welfare state, competitiveness in developed countries. Does he not realize that the introduction of over 2 billion people into the world economy would destabilize developed countries; particularly, vulnerable ones like Greece that either export low value added primary products or expensive low value added manufacturing products which are easily reproduced by Eastern Europeans or Indians at a fraction of the cost? His narrative on Greece, also betrays his Marxist roots. He is right that the architecture of the EU is flawed and that Germany is narrow minded and incapable of leadership; however, he fails to adequately emphasize the contradictions and weaknesses in the Greek economy which were created by Greeks, and to some extent Varoufakis played a role; albeit a small one, in maintaining this failed system by advising previously inept governments.

When PASOK took over in the early 1980’s, they did the right thing by allowing large sections of society (the Left) to participate in a modernized Greece. However, rather than build a system which provided equality of opportunity but rewarded meritocracy, they created a society of entitlement. Rather than maintain political power by providing a future vision of Greece to citizens they subsidized and handed out gifts to their clients for votes. Of course, elements of this were always present in Greek society but they were magnified starting from 1981 onwards. But the overriding problem was that the Greek elite lacked ability and imagination and the Greek people accepted this out of laziness and lack of intelligence. In fact, the elite was really a more sophisticated reflection of the society. Varoufakis hardly mentions this problem because it is a problem largely of the Left. Of course, there were very successful social democracies in northern Europe so it is not a problem of The Left. But a problem of a type of Left that developed in Greece which had some commonalities with social democratic bureaucratic capitalism of Spain, Portugal and Italy. Varoufakis skirts this issue and he is the worse for it.
The Greek “Progressive” Socialists have the greatest burden of responsibility in having created the poor economic, social and political model Greece has adhered to since 1974. Often, Varoufakis will still lay the blame at outside powers, but there are many European states who have to deal with the EU, Germany and the United States and do not have the same problems as Greece. When is he going to confess that it was largely his class of Greek Progressive Socialists that created this mess.

I read his post on LAOS and I must say I find it extraordinarily ridiculous and hysterical. By the way, LAOS is mostly populated by a bunch of untalented opportunists.

It amazes me that that logic goes right out the window when so called Progressives all of a sudden discuss right wing politics, nationalism, immigrants, Fascists. This post really does him a disservice and shows him for what he is, an extremely political partisan commentator that cares infinitely more for his class or narrow milieu than for the future of Greece.

I am surprised no one has commented on the perversity of holding such a conference in Texas, with it’s concluding panel titled “If Europe Fails.” It should have been held in Strasbourg and titled “If Europe Succeeds”! If we consider what Europe’s success already means – open civil society with a more socially just economic order combined with ‘soft power’ and protection of the people through enviromental and labor regulations – then perhaps it is easier to see that the forces stacked against the European Project are not just those “bad capitalists.” – When Mitterand was elected and the bond markets attacked France, he understood that the NATURE OF THE ATTACK WAS IDEOLOGICAL AND POLITICAL and WHERE IT CAME FROM – the hegemon most threatened by another political order. IE – back in the USSA.

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